By Dan Kervick
I suppose it is has become too much to expect that the White House and US Congress might actually succeed in doing something useful for the economy at some point in the near future. But perhaps they could at least settle on the wisdom of Hippocrates and agree to do no harm. Why not agree on a statement like the following:
Given the recent decline in the federal deficit – a natural result of US economic recovery – both parties agree the best economic policy for our country right now is to adopt a “wait and see” strategy. Rather then putting pressure on fragile private sector balance sheets by peremptorily reducing spending or raising taxes, we have concluded that it is best to allow the recovery to continue to take hold by standing pat with our current level of fiscal accommodation. Mindful of the hopeful economic signs and the self-stabilizing reduction in the deficit, we have agreed to repeal the Budget Control Act of 2011 and extend the payroll tax holiday at this time, and to stand ready to reevaluate the situation as economic developments merit.
Then come back in January and pass further middle class tax relief. Obama gives up on his grand bargain dreams; Republicans give up the goal of attacking entitlement programs. Both sides eat a little crow after putting the country through two years of wholly unnecessary debt hysteria.